Phelps Dunbar business attorney Ralph DiLeone is a lifelong fan of the Cleveland Guardians (formerly the Indians) and the Cleveland Browns … so patience is a virtue. It’s also a virtue when representing closely held family entities considering a sale, merger or acquisition.
“Everybody’s opinion is important because I can’t help them structure a deal if I don’t know what everybody’s concerns are,” said DiLeone. “Initially, a couple of people in the room won’t say anything. So, I’d better work the room. We need to be able to talk amongst each other. Then I’m going to help you get there.”
“I have a lot more fun with the closely held family businesses. The decisions have a bigger impact on their pocketbook. They’re always a little more concerned about what to do.”
DiLeone works primarily with businesses that have $50-100 million in annual revenues in industries including services, technology, manufacturing, construction and real estate.
“Everything but crypto and blockchain,” he laughs. His client base extends regionally, nationally and internationally.
Is it Right for the Seller?
DiLeone is not a fan of valuations when putting a price tag on a business. “In my mind, valuations aren’t critical. It’s really what does the seller need in order to leave this business? And if it’s $5 million, and the business is truly only worth $3 million, now’s not the right time to sell. We need to ratchet up the business to get to that number.”
“I consider myself a trusted advisor,” explained DiLeone. “I don’t have a hidden agenda. I’m not an employee, a fellow owner, or a fellow officer. I’ve got no skin in the game other than to help you get to where you want to be. The moment we walk out, we need to make sure we are a unified front, because that’s what the buyer’s going to see.”
Is it Right for the Buyer?
“I’m very conscious of what’s happening on the other side. The buyer and the seller will likely be doing something together for at least the next year or three. And if they’re at odds when they start, it’s not a good idea. There are a lot of things that we need to look at to make sure it’s right for the buyer. We want to make sure the numbers and the documentation are all squared, and everything’s copacetic.”
DiLeone recalled working with a client for several years on documentation to plan for an eventual sale. “A broker came in and told my client, ‘I’m going to get you way more than your asking price because the buyer can trust and believe what you’re telling them, and they won’t have clauses in documents that are going to hurt them.’”
Taxes are a crucial part of most deals. DiLeone spent five years working as a tax accountant at one of the “Big Eight” accounting firms. “I know enough tax to structure my deals, but what I don’t know is what your CPA has been doing with the rest of your tax stuff. I always want the whole team involved, and bringing somebody in after everything is done is a disaster.”
A Good Deal
DiLeone owned a law practice for more than 20 years before joining the Raleigh office of New Orleans-based Phelps Dunbar this year. The firm has 435 lawyers in 16 offices in the United States and one in London. “We have offices in regions where I have clients. It’s nice to have all that capacity in-house so everybody’s on the same page, rowing in the same direction to get what’s best for the client.”
“It’s been my experience that a good deal is when the buyer thinks they paid too much, and the seller thought they got too little. Because they figured out a way to work it out, and they both got a good deal.”
